IBD has called the "Market In Correction" as of yesterday's edition. Futures are up substantially this morning but it will take alot more that a one day rally to confirm a new uptrend.
A sharp bounce is not unexpected as the NYSE McClellan Oscillator had reached an oversold condition below -80. Reaching this level in such a short time from the top - only 7 days - coupled with a broken trendline is more consistent with initiation of a new downtrend rather than a brief correction. Other indicators such as the 14 day RSI are far from oversold, however, we must be open minded as the 4th wave scenario is still on the table until the July/August highs are broken.
We would like to see the SP500 remain below 1207 for the downtrend to remain intact.
For those following the IBD strategy, today's bounce would be a good opportunity to enter a short position or one could wait for confirmation with a break of Tuesday's low.